October 29, 2010

In Condom Investigation, Judge Orders Enforcement of FTC Subpoena

The maker of Trojan brand condoms must comply with a Federal Trade Commission subpoena that seeks documents from the company amid an anti-competition probe of the condom market in the United States, a judge in Washington ruled today.

The commission in June 2009 said it wants to determine whether New Jersey-based Church & Dwight Co. Inc. has acquired or is trying to acquire a monopoly in the distribution or sale of condoms in the United States. Church & Dwight makes household products that include Arm & Hammer baking soda.

Tied to the investigation, the commission issued a subpoena seeking documents and data from the company about its “Planogram” incentive program for stores that sell Trojan condoms. Church & Dwight did not comply with a deadline and did not ask for more time, according to court records.

Last November, lawyers for Church & Dwight filed a petition asking the FTC to quash or limit the subpoena. The commission denied the request and set a new compliance deadline for January. A month later, the FTC filed suit in the U.S. District Court for the District of Columbia.

A lawyer for the company, DLA Piper partner Earl Silbert, was not immediately reached for comment Friday afternoon.

Church & Dwight’s attorneys said the scope of the FTC inquiry should be limited to the United States. The production of documents from a Canadian subsidiary is overly burdensome and not relevant, the company’s lawyers said in court papers.

Magistrate Judge John Facciola said the FTC presumably doesn’t want to determine whether the company attempted to acquire a monopoly on the condom market in Canada. But that doesn’t mean the investigation must be restricted to the activity in the United States, the judge said. It’s possible, Facciola wrote in a 12-page ruling, for the company’s Canadian subsidiary to have helped the company acquire a monopoly in the United States.

“It cannot be true that in a globalized economy a federal agency may never investigate the activities of a foreign subsidiary of an American company merely because the agency’s original grant of authority is the investigation of economic activity that has had an impact on interstate commerce within the United States,” Facciola wrote.